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Money and credit - Ivanov VM

19.4. consumer credit

Consumer credit reflects the relationship between the lender and the borrower on the credit of final consumption. It differs from the loans provided to businesses for business purposes or for the acquisition of assets, generating cash flow. Consumer credit - a means of satisfying consumer needs of the population. For the population of credit accelerates the receipt of certain benefits that it could have only in the future, subject to the accumulation of the amount of money needed to buy the data of inventory or pay for services, construction and others. The issuance of consumer credit population, on the one hand, increases current purchasing power increases the standard of living, and with another - accelerate the implementation of inventory, services, contributes to the creation of fixed assets.

In the process of repayment of consumer loans in the population is reduced by the corresponding amount of solvency that must be considered when determining the volume and structure of goods turnover and paid services, the dynamics of income and expenditure, money supply in circulation. Thus, the size of loans is closely linked with the formation of the fund consumer population and its compliance with the scope and structure of commodity fund. In market economies, consumer credit as a convenient and profitable form of service is used widely.

Subjects of credit relations are natural persons (borrowers), and the role of lenders by banks, non-bank credit institutions (pawnshops, mutual aid funds, rental), enterprises and organizations. Mediator may exist between the bank and the public (trade organization). Lending objects are costs associated with the satisfaction of needs of the population of this nature, including the purchase of goods in the personal property, the cost of capital (investment) character on the construction and acquisition of immovable property.

Consumer credit is carefully regulated by the state, as connected with the needs of the population, its level of life (interest rates, credit availability).

Classification of consumer loans is carried out in accordance with the following principles:

• targeted;

• subjects of credit relations - banking and non-banking

loans;

• method of organization of lent funds - loan organized and unorganized, direct and indirect;

• issuance of forms - commodity and cash loans;

• the coverage of the credit cost of consumer goods and services - loans for the full cost or part payment;

• a way to repay the loan - repayable gradually or lump-sum payment;

• the terms of issue - the short, medium and long term.

Depending on the purpose of consumer loans are divided into:

• investment;

• to buy goods or pay for services;

• on the development of individual farms;

• targeted loans to individual social groups;

• check - by bank cards.

To include investment loans for cooperative housing, construction and purchase of individual houses, garden houses, reconstruction and repair of construction projects.

The next group includes loans for the acquisition of certain consumer goods or the payment of services: installment payments for durable goods, consumer goods rental.

For loans for the development of private households include loans for the purchase of agricultural machinery; Vehicle; purchase of livestock; purchase of planting materials, seedlings, fertilizer.

The social character have all kinds of consumer credit, but should be allocated to individual loans to target social groups (young families, students). Loans granted at preferential conditions: low interest rates, relatively simple procedure of registration of loans.

Unearmarked cash consumer loans are provided by commercial banks to the population, pawnshops on the security of property. It is a loan for urgent needs, the implementation costs that arise due to unforeseen circumstances (medical treatment, natural disaster and so on. D.).

Provision of credit checking is associated with the presence of the account (regular checking account in a bank). It is envisaged to provide the loan at the time of the exhaustion of the balance of the account (overdraft account-nye). These loans are repaid upon receipt of the account of the contributions or special contributions from the borrower. Another type of credit checking is based on the use of a special checking account and a special bank checks. Banks lend to customers established sample checks and dignity. The investor receives the loan as soon as the bill goes to the bank for posting to the account. Upon presentation of a check set the limit amount is reduced when the received payments, the credit limit is reduced at the expense of the check.

A special feature is the use of consumer credit growth in the use of bank credit cards. Credit cards provide for participation in the trade deal on three sides: the cardholder's bank and trade organizations. The card is issued to the client, if the state of its deposit and loan operations satisfactorily. On each card set credit limit, which can be changed in one direction or another depending on the mode of use of its cardholder.

Terms of consumer loans are different. Long-term loans are granted for investment costs. BANK issued consumer loan directly to a borrower (direct loans) or indirectly (the trade organization pawnshop).

A significant part of the buyer acquires goods under financial liabilities, and this practice is encouraged by retail organizations that offer goods on credit to increase their turnover. And as trade organizations do not always have the funds to cover the entire debt on the loan provided by them to the buyer, they apply for a loan to the bank. Direct consumer lending bank requires a personal conversation with the customer, the study provided documentation of the borrower's credit, providing loan repayment. Indirect loans from banks trade organizations are better than direct consumer loans. The trade organization has significant own means, takes the part of the work on the design of the loan, in return for his control. However, indirect lending encompasses a certain risk for the banks. The Bank does not come into direct contact with the consumers of the products and are not able to assess their financial situation, creditworthiness.

For consumer credit include credit pawnshops that enable the people to store personal items and household consumption, as well as getting a loan bail. Loan size is determined by the contract, depending on the amount and type of pawned items. When the non-discharge pawnshop loan transfers property for sale. Of this amount repaid storage charges, loans, interest and insurance costs and sales. Lombard loan balance returned to the owner upon presentation of receipts or preserved pledge ticket.